Negotiate a better interest rate before next RBA meeting

Beat the refinance rush, says finance expert

Negotiate a better interest rate before next RBA meeting


By Jayden Fennell

It’s been a tough start to 2023 for mortgage holders with inflation rising to 7.8% in the 12 months to December.

This is the fourth consecutive quarter CPI has increased and indicates the Reserve Bank of Australia will most likely increase the official cash rate when it meets for the first time in 2023 on February 7, says online comparison website Mozo.

Mozo personal finance expert Claire Frawley (pictured above) said borrowers could save $2,388 a year on a $600,000 loan by negotiating a better interest rate with their current lender.

“Borrowers shouldn’t be complacent and wait for their bank to move the rates, they should use this as a timely reminder to secure a lower rate now,” Frawley said. “After every cash rate increase last year, we saw a flurry of activity with people searching for lower interest rates. There’s no time like the present to call your lender and negotiate a lower interest rate.”

According to Mozo, the lowest variable home loan is 4.29%, 139bp below the average across all variable home loans.


Home Loan

Variable Rate

Comparison Rate

The Mutual Bank

Special Budget Home Loan



The Police Bank

Better Home Loan Special




Unloan Variable



Reduce Home Loans

Capitaliser Variable



Hume Bank

Lite-Blue Rate



Source: as at January 27, 2023, leading variable rates for owner occupier, principal and interest home loans at $400,000 with 80% LVR.

Frawley said it was unclear how many more interest rate increases there might be, but if 2022 had taught us anything, it was that every cent counts.

“The money you could save by renegotiating your interest rate is better off in your pocket than the bank’s profits,” Frawley said.

“Before calling your lender to negotiate, it’s a good idea to do some research and see what the best interest rate your lender is offering new customers and also what rates competitors are advertising. If your lender is not willing to budge and give you a lower interest rate, it might be time to consider refinancing. Many lenders are currently running cashback offers and discounts for borrowers with a lower LVR.”

Sydney mortgage broker Marina Michael, owner and head finance broker of Elending Finance, said she was loving the surge in the number of her clients refinancing their home loans.

“The post settlement client experience is so important and I would prefer managing a client who is refinancing rather than a new client as I do not have to stress about loyalty tax,” Michael said.

“I have been loving the incentives lenders are offering as it boosts competition amongst banks. At the end of the day, I don’t want my client to proceed with the wrong bank who might be offering a benefit such as instant cashback but have a higher interest rate or wrong loan structure, which will cost my client much more in the long term.”

In November, ubank raised the stakes in the highly competitive home loan market by offering a $6,000 cashback offer to its new borrowers, one of the largest cashback amounts seen amongst lenders.

Kanishka Raja, chief lending officer at ubank, said there was a mammoth 78% increase in digital home loan applications between January 2021 and August 2022 with the bank.

“In the current high inflation climate, refinancing home loans and searching for better deals has never been more frequent,” Raja said. “Everyone is looking for ways to get ahead.”

Are you negotiating your interest rate with your current lender or refinancing elsewhere? Let us know in the comments below.

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